Topic: Auto Industry Bailout
Racketing Up the U.S. Auto Industry It seems the Obama administration is pulling out the stops to take control and grow government!by Mister MandM
(libertarian)
Monday, March 30, 2009
I just read this morning that the Obama Administration effectively fired GM CEO Rick Wagoner last night. Now in my mind it's not unreasonable for him to be let go. After all, he has been the one in charge through GM's downturn and lack of profitability the past few years. Seems logical to me that if your company is losing market share and huge money, something should be done and a change in leadership seems a good idea!
But I sense a broader issue here. An industry analyst I was listening to on cable this morning implied that Wagoner was asked to step down for not getting the unions and suppliers to "come around" and help GM deliver a plan to Congress to save the company. He was told months ago that he had to present an effective plan to do so by this week.
Now I'm not sure what that all means, particularly when there was no "or else" or other conditions associated with that order. Apparently he was always going to come up a little short of what was expected by those business and manufacturing geniuses and final arbitrators of the auto industry... the United States Congress.
Perhaps the reality is that Wagoner was going to be fired anyway as he probably should have been. I think he knew months ago that he was already gone. But for it to be characterized that he was fired for not doing what he was told when Congress had effectively tied his hands and made it impossible for him to do so, is disgraceful.
How could Mr. Wagoner or any CEO for that matter persuade the biggest parts of any company's problems to "come around" when stripped of all leverage? Ironically, he was robbed of any chance he had of saving GM when the government made it clear with the first bailout that it was not going to let GM fail.
Why would the unions, with all of their prohibitive legacy costs and unrealistic wage and benefit demands capitulate to anything? Why would the parts dealers and suppliers be interested in working with him to restructure their businesses to help when they themselves just got billions from the government to prop them up?
The only leverage Wagoner had to negotiate anything was the threat that if the unions and suppliers couldn't work it out, the company would be "driven" into bankruptcy. That would have killed all existing agreements and forced a restructuring of all debt. For GM to continue in business the supplier and union agreements would have had to be re-negotiated and agreed upon within a practical plan. Otherwise the company would be ordered into liquidation and the suppliers, workers and shareholders would just go away and the bond and debt holders would divvy up what was left of the scraps.
When I heard it reported that"the Obama administration had asked Wagoner to step down" the alarms starting going off in my head. Maybe the Administration was thinking..."Chrysler is private so it can go ahead and fail and Ford didn't want to have anything to do with Fed money dammit! Wait a minute! GM is the largest car maker and biggest employer of union workers in the country...used to be the biggest in the world not too long ago!" I think the real picture is starting to develope here.
This to me begs the question...why would they do all of this? To me, this leadership restructuring seems like the logical conclusion of everything Congress and the Obama administration has done so far. Besides, if both Chrysler and GM go down, how much leverage would the unions have to get what they want with all of those out of work members hitting the street? This sounds something like the administrations credo of "not letting a good crisis go to waste". Perhaps now they can get their own man in to "drive" GM they way they want it... pun intended.
Perhaps the real answer lies in the style and manner in which our President made it clear that the Teamsters are going to be the only ones running trucking distribution in this country. Remember it was just a week or so ago that the NAFTA agreement was unlawfully dissed by him by not allowing Mexican truckers to deliver their goods here. This isn't much different from what is going on in Detroit with this GM intervention.
Sounds like payback to me! Remember in the olden days in a great Midwestern city where the greatest politicians ever known are bred? Unions elected them all. Oh they used to have to do a little old fashioned arm twisting or even at times restructure a kneecap or two. But they would get the job done and get their man elected.
Now these days things are a little different. Unions don't have the numbers to have that kind of power anymore. The only way they can have the impact they need now is to get an enforcer. How do you get one big enough to get what you want from a huge company like GM? Or from a huge industry like transportation and freight? You do what you did then, elect them... get a president or congress to help you out.
I know this sounds a little extreme and maybe it is. But I think there is philosophical merit to that argument. I think it apparent that what is being done is a show of power for the big unions. And why would a President want do this? Because he can... and feels he owes it to the ones that helped to get him elected! We'll see how this plays out, but I think it will be interesting to see who the new CEO of GM will be. I suspect we'll see a good old fashion union boy taking the helm. A party line butt-boy who has all the answers without having to say a thing.
It is amazing to me the arrogance and condescension of both this administration and Congress. Seems they are intent on owning GM, the banking sector and whatever else they can as part of a bigger plan to restructure capitalism. And what else would a really big government be want to do if unencumbered by petty things like the law and free enterprise? Exactly what they are doing...getting bigger and asserting more control.
Michael Murphy, March 30, 2009
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The views expressed in this
article are those of Mister MandM only and do not represent
the views of Nolan Chart, LLC or its affiliates. Mister MandM is
solely responsible for the contents of this article and is not an
employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
There is nothing the government has wanted more than to run big business as if it were they that had earned the rights to those positions. For years, politicians have looked at CEOs with envy and jealousy.
The people did not ask Waggoner to step aside. The President did. Yet I thought We, the People were the new shareholders?
Now they are taking that control through the force of government. The Executive Branch is acting like the Judicial Branch and the Legislative Branch combined. Is no one going to speak up from those"equal" branches of government?
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